More than ever during these uncertain and pandemic time are businesses going to need to look at how to improve their sustainability.
Corporate governance, stakeholder management, transparency and value-based management are part of the answer to ensure business survive future pandemics and challenges.
This requires that going into the future, for there to be sustainable wealth creation, financial managers will need to be measured on how they in a holistic manner, manage both the shareholder and stakeholders’ interests.
Economic wealth or profit will only be sustainably ensured if both shareholder and stakeholder act with common purpose. For this to occur, the financial manger must play their part.
Traditionally two primary roles have been performed by the financial manager:
- The first of these is to pursue wealth-creating investment opportunities,
- The second is to find funds to finance the investment.
We argue that there is an emerging third role, namely, to manage stakeholders (included here is customers, staff, society at large, suppliers and all who could be impacted) and shareholders (investors) in a manner which ensure greater accountability, transparency, and business sustainability.
The future financial manager cannot merely be burdened with number crunching-they will become the face in many cases of relationship and stakeholder management and the key to ensuring sustainability of not only the business but those who use their products.
Key to managing stakeholders is the financial manager shifting the focus from merely:
- Making a profit to the balancing of profits with other economic opportunity forgone or the economic opportunity cost in pursuit of the profit. Sustainability must be the guide and it will become incumbent upon financial managers to take a longer-term perspective when looking for opportunities to invest in or financing decisions. No more quick buck!!!
- It is all about Quality over Quantity.
- Reporting finances and company performance from what is merely prescribed by legislation to a more transparent, answerable, and accountable manner that empowers both shareholders and stakeholders. The aim must be to strike a balance between economic, social, individual, and collective goals, whilst seeking to align as closely as possible the interests of individuals, the company and society as a whole.